9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (3) TMI 544 - AT - Service TaxPenalty u/s 77 - Applicant had already deposited 25% of the penalty under Section 78 - Held that - The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-Sec.(3) of Sec. 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid - Therefore, penalty u/s 77 is set aside - Following decision of CCE vs. Adecco Flexione Workforce Solutions Ltd. 2011 (9) TMI 114 - KARNATAKA HIGH COURT - Decided in favour of assessee.
Issues: Application for waiver of pre-deposit of penalty under Section 77 of the Finance Act. Interpretation of Section 73(3) of the Finance Act.
Issue 1: Application for waiver of pre-deposit of penalty under Section 77 of the Finance Act. The applicant sought a waiver of pre-deposit of penalty imposed under Section 77 of the Finance Act, having already paid the service tax and interest. The applicant contended that upon the Revenue pointing out the service tax liability, they promptly paid the tax along with interest. Subsequently, a show cause notice for penalties was received, of which 25% had already been deposited under Section 78 of the Finance Act. The applicant challenged only the penalty under Section 77 of the Finance Act. The tribunal considered the applicant's reliance on the provision of Section 73(3) of the Finance Act, which states that when service tax with interest is paid before the issuance of a show cause notice, no such notice is required. Issue 2: Interpretation of Section 73(3) of the Finance Act. The applicant referenced the decision of the tribunal in Inland Mines & Minerals Pvt. Ltd. vs. CCE, Rajkot and the judgment of the Hon'ble Karnataka High Court in CCE vs. Adecco Flexione Workforce Solutions Ltd. The tribunal noted that the issue was settled by the decision of the Hon'ble Karnataka High Court in the Adecco Flexione case. The High Court emphasized that authorities should not proceed against taxpayers who promptly pay service tax with interest, as expressly provided in Section 73(3) of the Finance Act. The High Court criticized the authorities for wasting time on such cases and highlighted that if notices are issued contrary to the said provision, the issuing authority should be held accountable. Consequently, in line with the Karnataka High Court's decision, the tribunal set aside the penalty imposed under Section 77 of the Finance Act, disposing of the appeal and the stay petition accordingly. This judgment underscores the significance of prompt payment of service tax with interest and the implications of Section 73(3) of the Finance Act on the issuance of show cause notices and penalties. The decision serves as a reminder to tax authorities to act in accordance with the law and not harass compliant taxpayers, as highlighted by the Hon'ble Karnataka High Court's observations.
|
